STATE OF ILLINOIS HEALTH FACILITIES AND SERVICES REVIEW BOARD

525 WEST JEFFERSON ST. • SPRINGFIELD, ILLINOIS 62761 • (217) 782-3516• FAX: 217) 785-4111

ILLINOIS HEALTH FACILITIES AND SERVICES REVIEW BOARD

DOCKET NO: H-03

BOARD MEETING: February 25, 2020

PROJECT NO: 19-043 PROJECT COST:

Original: $331,000 FACILITY NAME:

Metroeast Endoscopic Surgery Center CITY: Fairview Heights

TYPE OF PROJECT: Non-Substantive HSA: XI PROJECT DESCRIPTION: The Applicant (Metroeast Endoscopic Surgery Center, LLC) proposes to add podiatry, pain management, ophthalmology and orthopedic surgery services to its current ambulatory surgical treatment center (ASTC) located in Fairview Heights, Illinois. The reported project costs are $331,000. The expected completion date is June 30, 2021.

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EXECUTIVE SUMMARY PROJECT DESCRIPTION:

• The Applicant (Metroeast Endoscopic Surgery Center, LLC) proposes to add podiatry, pain management, ophthalmology and orthopedic surgery services to its current ambulatory surgical treatment center (ASTC) located in Fairview Heights, Illinois. The project costs are $331,000. The expected completion date is June 30, 2021.

• In June of 2019 the State Board approved Metroeast Endoscopic Surgery Center to add general surgery, plastic and gynecological surgical services at a cost of $180,000 with a completion date of June 30, 2020 (Permit #19-010).

• In March of 2013 the State Board approved Metroeast Endoscopic Surgery Center to establish a limited specialty ambulatory surgical treatment center performing gastroenterology procedures in 2,634 GSF of leased space located in Fairview Heights, Illinois at a cost of $1,113,642 (Permit #12-105).

• This project was deferred from the December 10, 2019 State Board Meeting. The Applicant provided comments on the Original State Board Staff Report. In those comments the Applicant argues that this Application should be reviewed as the previous Permit #19-010 which added surgical specialties and previously approved applications to add surgical services. 77 ILAC 1130.620 states “Each application will be reviewed and considered on an individual basis unless HFSRB has established review criteria or procedures that pertain or relate to comparative review or "batching" of applications.” The State Board has not established comparative review or batching of applications. These comments are attached at the end of this report as well as the additional comments provided by the Applicant.

WHY THE PROJECT IS BEFORE THE STATE BOARD: • The project is before the State Board because the project proposes a substantial change in scope as

defined at 20 ILCS 3960/5. • One of the objectives of the Health Facilities Planning Act is “to assess the financial burden to

patients caused by unnecessary health care construction and modification. Evidence-based assessments, projections and decisions will be applied regarding capacity, quality, value and equity in the delivery of health care services in Illinois. Cost containment and support for safety net services must continue to be central tenets of the Certificate of Need process.” [20 ILCS 3960/2]

PURPOSE OF THE PROJECT: • The Applicant stated the following: “The purpose of this project is to improve access and

quality of care and to reduce costs for residents of the geographic service area (GSA). With the relocation of St. Elizabeth's Hospital from Belleville to O'Fallon (Project #14-043) and The Memorial Network shifting services from Memorial Hospital Belleville to Memorial Hospital East in Shiloh (Project #16-018), residents of Fairview Heights and Belleville need additional services to be provided locally to fill the void left by these departures.”

PUBLIC HEARING/COMMENT:

• A public hearing was offered but was not requested. The project file contains 3 letters of support and 4 letters of opposition. The support letters are from:

Bruce Chaddick - Patient Shirley Jones - Resident Meghan Kreher – Resident Arthur Johnson – Resident Chester Health System

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East Side Health System Esquire Orthopedic Rehabilitation and Sports Medicine God Inspired Orthopedic Church Grace Church John Wagner – Resident Medicate Pharmacy State Representative Jay Hoffman State Representative Latoya Greenwood

Letters of opposition were submitted from the following: George Kruse Chairperson - HSHS St. Joseph’s Hospital – Breese Chris Klay, President and CEO – HSHS St. Joseph’s Hospital - Breese Megan Espienshcied MSN, RN – Director of Surgical Services – HSHS St.

Joseph’s Hospital – Highland Dr. David Neighbors

All letters are attached to end of this report.

SUMMARY: • As stated, the Applicant is asking the State Board to approve the addition of surgical

specialties podiatry, pain management, ophthalmology and orthopedic surgery services in the 17-mile GSA. The Applicant was approved in June of 2019 to add surgical specialties general surgery, plastic and gynecological surgical services and the project is not yet complete (June 30, 2020 completion date).

• On February 5, 2020 the State Board was notified that the Applicant had completed a modernization of the Surgery Center. The modernization did not require State Board approval because the cost of the modernization was under the capital expenditure threshold. The facility now has two operating rooms, 2 pre-op, and 4 post-op rooms. This is a change from the one procedure room. Operating room capacity has increased in this 17-mile GSA.

• There are 8 ASTCs and 6 hospitals within the 17-mile GSA. Of the 8 ASTCs only one surgery center provides the surgical specialties being proposed. That Surgery Center (Anderson Surgery Center) was recently approved (Permit #18-031) and is not operational. The six hospitals provide all the surgical specialties being proposed and all are underutilized.

• The Applicant argues that the cost of the procedures proposed to be performed at an ASTC are less than the cost of these procedures performed at a hospital outpatient department. However, any savings based on lower reimbursements for services need to be compared against the fixed costs that remain in the hospital. It is not clear how much impact the shifting of revenue from one cost center (hospital) to another cost center (ASTC) on the overall cost to health care delivery.

• The Applicant states that the ASTC has provided Medicaid services in excess of the State Average for ASTCs. Over the past 4-years (2018-2015) Metroeast has averaged 10% Medicaid Revenue and 17 % Medicare Revenue.

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• The procedures currently performed at this ASTC are gastro procedures and there has been no documentation provided that the specialties proposed to be performed would be for Medicaid patients. Historical ASTCs data statewide indicates more commercially insured, higher reimbursed care is provided at ASTCs, and more governmental, lower reimbursed care provided at the hospitals. Statewide ASTCs provided 1.7% in Medicaid care in 2018 and very little or no charity care.

• The Applicant has addressed a total 15 criteria and have not met the following.

State Board Standards Not Met

Criteria Reasons for Non-Compliance

77 ILAC 1110.235 (c) (6) – Service Accessibility The Applicant was unable to meet one of the four conditions required by this criterion (see pages 10-11 of this report)

77 ILAC 1110.235 (c)(7) – Unnecessary Duplication/Maldistribution

There is existing capacity in the 17-mile GSA that is can accommodate the workload identified by this Application. (See page 12)

77 ILAC 1110.235(c) (10) – Assurance The criterion requires the facility will be at target utilization within two years after project completion “not be optimized to exceed its current utilization.” (See page 13 of this report)

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STATE BOARD STAFF REPORT Project #19-043

Metroeast Endoscopic Surgery Center

APPLICATION/SUMMARY CHRONOLOGY Applicant(s) Metroeast Endoscopic Surgery Center, LLC

Facility Name Metroeast Endoscopic Surgery Center Location 5023 North Illinois Street, Fairview Heights, Illinois

Permit Holder Metroeast Endoscopic Surgery Center, LLC Operating Entity/Licensee Metroeast Endoscopic Surgery Center, LLC

Owner of Site Ahmed Investments, LLC Gross Square Feet 2,642 GSF

Application Received September 18, 2019 Application Deemed Complete September 19, 2019

Financial Commitment Date June 30, 2021 Anticipated Completion Date June 30, 2021

Review Period Ends December 8, 2019 Review Period Extended by the State Board Staff? No

Can the Applicant request a deferral? No I. Project Description

The Applicant (Metroeast Endoscopic Surgery Center, LLC) proposes to add podiatry, pain management, ophthalmology and orthopedic surgery services to its current ambulatory surgical treatment center (ASTC) located in Fairview Heights, Illinois. The reported project costs are $331,000. The expected completion date is June 30, 2021.

II. Summary of Findings

A. State Board Staff finds the proposed project is not in conformance with all relevant

provisions of Part 1110 (77 ILAC 1110). B. State Board Staff finds that all relevant provisions of Part 1120 (77 ILAC 1120) are

not applicable to this project.

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III. General Information

Metroeast Endoscopic Surgery Center, LLC was organized as a Limited Liability Company (LLC) in November of 2011, and is wholly owned by Dr. Shakeel Ahmed, M.D. Financial commitment will occur after permit approval. The proposed project is a non-substantive project subject to a Part 1110 and Part 1120 review. Financial commitment will occur after permit issuance. Non-substantive projects are all projects not considered substantive projects. Substantive projects include no more than the following:

1. Projects to construct a new or replacement facility located on a new site; or a replacement

facility located on the same site as the original facility and the costs of the replacement facility exceed the capital expenditure minimum.

2. Projects proposing a new service or discontinuation of a service, which shall be reviewed by the Board within 60 days.

3. Projects proposing a change in the bed capacity of a health care facility by an increase in the total number of beds or by a redistribution of beds among various categories of service or by a relocation of beds from one facility to another by more than 20 beds or more than 10% of total bed capacity, as defined by the State Board in the Inventory, whichever is less, over a 2-year period. [20 ILCS 3960/12]

IV. Health Service Area

The ASTC is in the HSA XI Health Service Area. HSA XI includes the Illinois counties of Clinton, Madison, Monroe, and St. Clair. The ASTC is in St. Clair County. There are nine ASTC in this service area. The State Board is projecting an increase in the population of 1% in the HSA XI Service Area for the period 2017-2022.

Facility City Anderson Surgery Center, LLC Edwardsville Bel-Clair Amb. Surgical Ctr. Belleville Edwardsville Ambulatory Surg Ctr, Glen Carbon Hope Clinic or Women, Ltd Granite City Illinois Eye Surgeons Cataract Sur Belleville Metroeast Endoscopy Surgery Center Fairview Heights Monroe County Surgical Center Waterloo Novamed Eye Surgery Ctr Of Maryville Maryville Physician's Surgical Center, Ltd O’Fallon

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V. Project Uses and Sources of Funds

The Applicant is adding four surgical specialties, and reports project-related costs totaling $331,000 for Movable Equipment. This capital expense will be funded with cash.

VI. Background of the Applicant

A) Criterion 1110.110(a) – Background of the Applicant

The Applicant provided the required authorization allowing the State Board and IDPH access to all information to verify information in the application for permit. The Applicant attest that no adverse actions have been taken against any facility owned and/or operated by them during the three (3) years prior to the filing of this application. Certificates of Good Standing has been provided for the Applicant as required. An Illinois Certificate of Good Standing is evidence that an Illinois business franchise (i.e. Illinois Corporation, LLC or LP) is in existence, is authorized to transact business in the state of Illinois and complies with all state of Illinois business requirements and therefore is in "Good Standing" in the State of Illinois

VI. Purpose of Project, Safety Net Impact Statement and Alternatives

A) Criterion 1110.110 (b) Purpose of the Project

The Applicant states: The purpose of this project is to improve access and quality of care and to reduce costs for residents of the geographic service area (GSA). With the relocation of St. Elizabeth's Hospital from Belleville to O'Fallon (Project #14-043) and The Memorial Network shifting services from Memorial Hospital Belleville to Memorial Hospital East in Shiloh (Project #16-018), residents of Fairview Heights and Belleville need additional services to be provided locally to fill the void left by these departures. It is well known that many patients travel to St. Louis for specialty care and advanced care, including podiatry, pain management, ophthalmology and orthopedic surgical services. MESC hopes to be able to serve these residents in their communities rather than having them travel outside of Illinois to obtain healthcare. (Application for Permit page 52-54)

B) Criterion 1110.110 (c) - Safety Net Impact Statement

This project is a non-substantive project and a safety net impact statement is not required for non-substantive projects. Charity care information is required, and the Applicant supplied the required data for Metroeast Endoscopy Surgery Center, LLC (see Table One).

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TABLE ONE

Charity Care/Safety Net Information

Metroeast Endoscopy Surgery Center, LLC Year 2016 2017 2018

Net Patient Revenue $2,178,073 $3,971,552 $2,343,762 Amount of Charity Care (charges) $9,850 $16,500 $0 Cost of Charity Care $0 $0 $0 Ratio (charity care to net patient revenue) 0.00% 0.00% 0.00%

C) Criterion 1110.110 (d) - Alternatives to the Project

The Applicant stated the following.

Do Nothing This alternative would maintain the status quo, which is to have patients undergo procedures in the hospital setting and/or travel to Missouri to obtain care. It would not improve access to high-quality, lower cost ASTC care as described throughout this application. Furthermore, doing nothing would not improve access to safety net services for residents of the GSA or increase utilization at Metroeast Endoscopic Surgery Center (MESC). For these reasons, this alternative was rejected.

Add surgical specialties at MESC (Proposed). ($331,000) To improve access for Fairview Heights area residents to podiatry, pain management, ophthalmology and orthopedic surgery services in the ASTC setting, the Applicant decided to add these surgical specialties to its existing multi-specialty ASTC. After weighing this option against others, it was determined that this alternative would provide the greatest benefit in terms of increased utilization and increased access to health care services. (Application for Permit page 67)

VIII. Project Scope and Size, Utilization and Assurances

A) Criterion 1110.120 (a) - Size of Project No new construction is being proposed in this project. The current facility has 2 operating rooms and 4 recovery stations in 2,642 GSF of space.

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IN CONFORMANCE WITH CRITERION SIZE OF PROJECT (77 ILAC 1110.120 (a))

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B) Criterion 1110.120(b) – Projected Utilization

The State Board does not have a specific utilization standard to add a specialty to an existing ASTC. The utilization standard for an ASTC is 1,500 hours per operating/procedure room. The Applicant had 1,382 hours of endoscopic procedures in 2018, slightly below the standard of 1,500 hours per procedure room. Note: Permit #19-010 was approved to add one procedure room and that construction has not completed as of the date of this report.

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IN CONFORMANCE WITH CRITERION PROJECTED UTILIZATION (77 ILAC 1110.120(b))

C) Criterion 1110.120(e) – Assurances

The Applicant stated: “By the second year of operation after the project completion date, the annual utilization of the surgical rooms at Metroeast Endoscopic Surgery Center will, by the addition of the anticipated cases, be optimized to exceed its current utilization.”

The criterion requires the facility will be at target utilization within two years after project completion “not be optimized to exceed its current utilization.”

STATE BOARD STAFF FINDS THE PROPOSED PROJECT NOT BE IN CONFORMANCE WITH CRITERION ASSURANCES (77 ILAC 1110.120(e))

VIII. Non-Hospital Based Ambulatory Surgical Treatment Center Services

A) Criterion 1110.235(a) - 77 Ill. Adm. Code 1100 (Formula Calculation)

No formula need determination for the number of ASTCs and the number of surgical/treatment rooms in a geographic service area has been established. Need shall be established pursuant to the applicable review criteria of this Part.

B) Criterion 1110.235(c) (2) (B) (i) & (ii) - Service to Geographic Service Area

Residents

The Geographic Service Area for the facility located in Fairview Heights, Illinois is 17 miles in all directions per 77 ILAC 1100.510(d). The Applicant supplied a patient/zip code list containing 152 zip codes and 3,782 patients (2018 information). The Applicants also supplied a zip code listing for the 17-mile service area, identifying 43 zip codes, and a population of 481,577 residents (see project file). A comparative analysis between the zip code listings shows that of the 3,782-patient served by the

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Endoscopy Center 2,401 patients (64%) resided in 13 zip codes. from within the prescribed service area. The Applicant has successfully addressed this criterion.

TABLE TWO Patients by Zip Code within the 17-mile GSA

Zip Code City 2017 Population

2018 Patients

62040 Granite City 42,517 205

62269 O'Fallon 33,265 449 62234 Collinsville 32,496 209

62025 Edwardsville 32,008 59 62226 Belleville 28,550 311

62221 Belleville 28,460 308 62220 Belleville 19,510 139

62223 Belleville 17,204 161 62208 Fairview Heights 16,822 279

62298 Waterloo 16,604 39 62249 Highland 15,705 29

62206 East St. Louis 15,233 91 62258 Mascoutah 9,452 122

Total 2,401

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IN CONFORMANCE WITH CRITERION SERVICE TO GEOGRAPHIC SERVICE AREA RESIDENTS (77 ILAC 1110.235(c) (2) (B) (i) & (ii))

C) Criterion 1110.235(c)(3)(A) & (B) - Service Demand – Establishment of an ASTC Facility or Additional ASTC Service

The Applicants provided referral letters from four physicians practicing within the service area. Of the number of patients proposed to be referred to the ASTC 513 referrals were accepted for a total of 1,241 hours. The Applicant has successfully addressed this criterion.

TABLE THREE

Historical, Proposed and Accepted Referrals

Specialty Historical Proposed Accepted (1)

Time Per Procedure (Hours)

Total Hours

Dr Taylor Podiatry 322 150 150 1.86 279

Dr. Ungacta Ortho 410 221 221 3.85 850.85 Dr. Belcher Pain Management 1,200 600 0 0.62 0

Dr. Stock Ophthalmology 571 350 142 0.78 110.76

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TABLE THREE Historical, Proposed and Accepted Referrals

Specialty Historical Proposed Accepted (1)

Time Per Procedure (Hours)

Total Hours

Total 2,503 1,321 513 1,240.61 1. Proposed referrals were not accepted because they were from an unlicensed facility.

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IN CONFORMANCE WITH CRITERION SERVICE TO GEOGRAPHIC SERVICE AREA RESIDENTS (77 ILAC 1110.235(c) (3) (A) & (B))

D) Criterion 1110.235(c)(5)(A) & (B) - Treatment Room Need Assessment

The Applicant currently has two procedure rooms, two Stage One, and two Stage two recovery stations. The table below shows the historical utilization at the facility for the period 2015-2018. Based upon the historical and projected utilization data, the Applicant can justify the two procedure rooms.

TABLE FOUR

Historical and Estimated 2023 Number of Hours at the Surgery Center Year 2015 2016 2017 2018 2023

Hours 1,198 1,610 1,542 1,372 2,613 (Proj.)

1,372 Actual Hours + 1,240.60 Projected hours (Table Three above) = 2,613 Hours

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IN CONFORMANCE WITH CRITERION TREATMENT ROOM NEED ASSESSMENT (77 ILAC 1110.235(c) (3) (A) & (B))

E) Criterion 1110.235 (c) (6) – Service Accessibility

The Applicant was not able to meet one of the four conditions listed below. A) There are no other IDPH-licensed ASTCs within the identified GSA of the proposed project; B) The other IDPH-licensed ASTC and hospital surgical/treatment rooms used for those ASTC services proposed by the project within the identified GSA are utilized at or above the utilization level specified in 77 Ill. Adm. Code 1100; C) The ASTC services or specific types of procedures or operations that are components of an ASTC service are not currently available in the GSA or that existing underutilized services in the GSA have restrictive admission policies; D) The proposed project is a cooperative venture sponsored by 2 or more persons, at least one of which operates an existing hospital. 1. There 8 ASTCs and 6 hospitals within the 17-mile GSA. 2. One ASTC (Anderson Surgery Center1) in this 17-mile GSA has been approved

to provide the surgical specialties being proposed (podiatry, pain management, ophthalmology and orthopedic surgery services) by the Applicant to be added.

1 Anderson Surgery Center approved as Permit #18-031 in December 2018 is not operational.

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The remaining ASTCs have not been approved to provide all the specialties being proposed. All these surgical specialties are available at the six hospitals in the 17-mile GSA.

3. The services proposed to be added by the Applicant are available in the 17-mile GSA.

4. The propose project is not a cooperative venture.

TABLE FOUR ASTCs within the 17-Mile GSA

ASTC City Miles Specialty Rooms 2018 hours

Met Standard

The Hope Clinic for Women Granite City 16.7 OB/GYN 2 942 No Bel-Clair Ambulatory Surgical Center Belleville 4.8 Gastro 2 986 No

Illinois Eye Surgeons Cataract Surgery Belleville 1 Ophthalmology 4 1,872 No

Metroeast Endoscopy Surgery Center Fairview Heights 0 Gastro, general surgery, plastic

surgery and GYN 2 1,382 No

Skin Cancer Surgery Center (1) O'Fallon 4.9 General 0 0 NA

Physician's Surgical Center (2) O'Fallon 5.7 Gastro 2 1,093 No Novamed Eye Surgery Center of Maryville Maryville 11.8 Ophthalmology 1 973 Yes

Anderson Surgery Center (1) Edwardsville 16.5

General, Gastro, Obstetrics,

Ophthalmology, Oral, Otolaryngology, Pain Management, Plastic,

Podiatric and Urologic Surgery

3 0 NA

1. Surgery Center approved as Permit #18-031 not yet operational. 2. Approved to relocate to O’Fallon, Illinois Permit #19-025

TABLE FIVE Hospitals within the 17-mile GSA

Hospital City Miles Operating/Procedure Rooms

2018 hours

Met Standard

Touchette Regional Hospital Centreville 9.3 6 940 No Memorial Hospital Belleville 4 33 16,839 No

Gateway Regional Medical Center Granite City 16.8 10 5,380 No HSHS St Elizabeth's Hospital O'Fallon 5.8 14 14,943 No

Memorial Hospital - East Shilo 5.2 6 3,882 No

Anderson Hospital Maryville 12.3 12 10,633 No

Total Operating/Procedure Rooms 81

STATE BOARD STAFF FINDS THE PROPOSED PROJECT NOT IN CONFORMANCE WITH CRITETION SERVICE ACCESSIBILITY (77 ILAC 1110.235 (c) (6))

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F) Criterion 1110.235 (c) (7) – Unnecessary Duplication/Maldistribution

Maldistribution There is a total of 97 operating/procedure rooms in the 17-mile GSA. There are approximately 481,577 residents (2017 population estimate-American Community Survey) in the 17-mile GSA. The ratio of operating/procedure rooms per 1,000 population is .2014 within this GSA [97 operating/procedure rooms ÷ (481,577/1,000 or 481.5) = .2014]. The State of Illinois population is 12,802,000 (2017 IDPH projected) and 2,712 operating procedure rooms (2018 data). The ratio of operating/procedure rooms per 1,000 population in the State of Illinois is .2118 To have a surplus of operating/procedure rooms within the 10-mile GSA the ratio of population to operating/procedure rooms must be 1.5 times the State of Illinois ratio or .3177 operating/procedure rooms per 1,000 population. There is a not a surplus of operating/ procedure rooms in the 10-mile GSA.

Hospitals and ASTCs within the Proposed GSA There are eight ASTCs and six hospitals within the 10-mile GSA. (see Table above). As stated one ASTC (Anderson Surgery Center) has been approved to provide the surgical specialties being proposed by this project. None of the six hospital are at target occupancy. The proposed project will result in an unnecessary duplication of service. The Applicants have not successfully addressed this criterion. STATE BOARD STAFF FINDS THE PROPOSED PROJECT NOT IN CONFORMANCE WITH CRITERION UNNECESSARY DUPLICATION/MALDISTRIBUTION (77 ILAC 1110.235(7))

G) Criterion 1110.235(c)(8)(A) & (B) - Staffing

Metroeast Endoscopy Center is currently staffed in accordance with IDPH and Joint Commission accreditation2 staffing requirements. The Applicant anticipate all staff from the existing ASTC will continue to practice there when additional specialties are added. The Applicants intend to hire a full-time RN for the second procedure room, and a medical assistant for ancillary support. The applicants also anticipate the recruitment of a CRNA for anesthesia services.

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IN CONFORMANCE WITH CRITERION STAFFING (77 ILAC 1110.235(c) (8) (A) & (B))

2 The Joint Commission is a United States-based nonprofit tax-exempt 501(c) organization that accredits more than 21,000 US health care organizations and programs. The international branch accredits medical services from around the world. A majority of US state governments recognize Joint Commission accreditation as a condition of licensure for the receipt of Medicaid and Medicare reimbursements.

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H) Criterion 1110.235(c)(9)-Charge Commitment

A listing of procedures by primary CPT code for the proposed new specialties with the maximum charge has been provided as required and includes a certified attestation that the charges for these procedures will not increase in the two years following project completion. The Applicant has met the requirements of this criterion.

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IN CONFORMANCE WITH CRITERION CHARGE COMMITMENT (77 ILAC 1110.235(c) (9))

I) Criterion 1110.235(c)(10)(A) & (B) - Assurances

The Applicant notes Metroeast Endoscopy Center will continue its existing peer review program that evaluates whether patient outcomes are consistent with quality standards established by professional organizations for surgical services. If outcomes do not meet or exceed those standards, a quality improvement plan will be initiated.

The Applicant stated:

“By the second year of operation after the project completion date, the annual utilization of the surgical rooms at Metroeast Endoscopic Surgery Center will, by the addition of the anticipated cases, be optimized to exceed its current utilization.”

The criterion requires the facility will be at target utilization within two years after project completion “not be optimized to exceed its current utilization.”

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IS NOT IN CONFORMANCE WITH CRITERION ASSURANCES (77 ILAC 1110.235(c) (10) (A) & (B))

IX. Financial Viability

A) Criterion 1120.120 – Availability of Funds The applicant is funding the project in its entirety with cash on hand, amount to $331,000. The applicants Dr. Ahmed has no audited financial statements but has supplied a letter from Buckingham Strategic Wealth attesting to the presence of enough financial resources to finance the proposed project in its entirety.

B) Criterion 1120.130 - Financial Viability

The Applicant notes the project is funded entirely with cash/securities (internally), no financial viability ratios are required.

Page 15 of 15

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IS IN CONFORMANCE WITH CRITERION AVAILABILITY OF FUNDS (77 IAC 1120.120) AND FINANCIAL VIABILITY (77 IAC 1120.130).

X. Economic Feasibility

A) Criterion 1120.140(a) –Reasonableness of Financing Arrangements B) Criterion 1120.140(b) – Conditions of Debt Financing

The Applicant is funding this project with cash/securities (internally) no debt is being utilized.

C) Criterion 1120.140 (c) – Reasonableness of Project Costs

Movable Equipment Costs are $331,000 or $165,500 per procedure room which is below the State Board Standard of $504,437 per Operating Room. The Applicant has successfully addressed this criterion.

D) Criterion 1120.140(d) – Projected Direct Operating Costs

The Applicant is estimating $614.70 in direct operating costs per surgical case by the second year after project completion at the ASTC. The State Board does not have a standard for this criterion.

E) Criterion 1120.140(e) – Total Effect of the Project on Capital Costs

The Applicant is estimating $21.48 in capital costs per surgical case by the second year after project completion at the ASTC. The State Board does not have a standard for this criterion.

STATE BOARD STAFF FINDS THE PROPOSED PROJECT IS IN CONFORMANCE WITH CRITERION REASONABLENESS OF PROJECT COSTS (77 IAC 1120.140(a) TERMS OF DEBT FINANCING (77 IAC 1120.140(b), REASONABLENESS OF PROJECT COSTS (77 IAC 1120.140(c), PROJECTED DIRECT OPERATING COSTS (77 ILAC 1120.140(d), and PROJECTED TOTAL EFFECT OF THE PROJECT ON CAPITAL COSTS (77 ILAC 1120.140(e)).

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19-043 Metroeast Endoscopic Surgery Center - Fairview Heights

0 mi 2 4 6 8

HSHS St. Joseph's Hospital Highland

November 18, 2019

Ms. Courtney Avery Administrator Illinois Health Facilities and Services Review Board 525 W. Jefferson 2nd Floor Springfield, IL 62702

Re: Project # 19-043 Metroeast Endoscopic Surgery Center

Dear Ms. Avery:

12866 Troxler Avenue Highland, IL 62249

(618) 651-2600

www.sljosephshighland.org

An Affiliate of Hospital Sisters Health System

RECEIVED NOV 2 0 2019

HEALTH FACILtTIES & SERVICES REVIEW SOARD

Two years ago, l became the Director of Surgical Services for HSHS St. Joseph's Ho.~pital in Highland. Since that time, my focus has centered on expanding the procedures offered in the surgical services department at our community hospital. We have several skilled surgeons and highly trained staff who have worked over the years to ensure that we provide the safest, quality care for our patients.

The proposal submitted by Dr. Shakeel Ahmed to add orthopedic surgery services to the Metroeast Endoscopic Surgery Center located in Fairview Height~ could negatively impact our focus on growth for this department, especially as we try to attract new providers to the community. Currently, we have two dedicated orthopedic surgeons who routinely schedule patients for smgerie.~ at our hospital; however, we continue to experience lower than expected utilization on a weekly basis. The proposal from Dr. Ahmed not only has the potential to negatively impact capacity at our hospital but will also affect recruitment effons of new providers. As part of our growth initiatives, we have ongoing recruitment efforts to bring addiliona! 01thopedic surgeons to the area. A priority for new orthopedic surgeons is being able to perfonn a variety of surgeries on a routine basis co maintain their skill level. Adding 01thopedic surgical ~ervices at the MESC would only serve to erode the volume of potential surgical procedures that would be performed at our hospital. This in tum leads potential surgeons to seek other facilities that have a larger patient pool where they can maintain their skills.

HSHS St. Joseph's Hospital Highland

12866 Troxler Avenue Highland, IL 62249

(618) 651-2600

www.stjosephshighland.org

An Affiliate of Hospital Sisters Health System

I urge you to deny the proposed addition of orthopedic surgical rooms to the Metroeast Endoscopic Surgery Center because it will stagnate the growth of services offered at our community hospital and affect our ability to recrnit new physicians to our rural community.

Sincerely,

i!i:f:~I wJ Director of Surgical Service.~ HSHS St. Joseph's Hospital, Highland